What is the primary purpose of this $1.15 billion loan?

The primary purpose of the loan is to fund a dividend payment from La Frontera Generation, LLC to its parent, NextEra Energy Resources, LLC. NextEra Energy Resources intends to use these proceeds for its general corporate purposes.

What assets are securing this loan?

The loan is secured by liens on natural gas-fired generation facilities totaling approximately 2,792 megawatts and related assets located in Texas. It also includes security over certain other assets of, and the ownership interest in, La Frontera Generation, LLC.

What are the key financial terms of the loan?

The loan is a $1.15 billion limited-recourse senior secured variable rate term loan maturing in September 2020. It features minimum quarterly principal amortization with additional annual payments based on available cash flow from the generation facilities. Interest is variable, tied to LIBOR plus a specified margin, and La Frontera must hedge interest rate risk on at least 50% of the principal for the first three years.

What does 'limited-recourse' mean in the context of this loan?

Limited-recourse means that the lenders' recovery in case of default is primarily limited to the specific collateral pledged (the Texas generation facilities and related assets), rather than the general assets of NextEra Energy, Inc. or its other subsidiaries. While there may be some guarantees or specific recourse provisions, the primary recourse is to the secured assets.

NEXTERA ENERGY INC 8-K: Financial Events

Summary

This 8-K filing from NextEra Energy Inc. (NEE) on May 15, 2013, primarily details a significant financing event for its subsidiary, La Frontera Generation, LLC. La Frontera secured a $1.15 billion limited-recourse senior secured term loan to fund a dividend payment to its parent, NextEra Energy Resources, LLC (NEER), which in turn will use these funds for general corporate purposes. This transaction directly impacts NEE's financial structure by introducing new debt and utilizing proceeds for broader corporate needs. The loan, maturing in September 2020, is backed by natural gas-fired generation facilities in Texas totaling approximately 2,792 megawatts, along with related assets and La Frontera's ownership interest. The loan features variable interest rates tied to LIBOR plus a specified margin, quarterly principal amortization, and annual additional payments contingent on cash flow from the generation facilities. A key protective measure requires La Frontera to hedge interest rate risk on at least 50% of the principal for the first three years.

Key Highlights

1NextEra Energy's indirect subsidiary, La Frontera Generation, LLC, obtained a $1.15 billion senior secured term loan.
2The loan matures in September 2020 and is primarily used to fund a dividend to NextEra Energy Resources, LLC, for general corporate purposes.
3The loan is secured by approximately 2,792 megawatts of natural gas-fired generation facilities and related assets in Texas.
4The financing is structured as a limited-recourse loan.
5Interest rates are variable, based on LIBOR plus a margin, with flexible rate period selections.
6La Frontera is required to hedge interest rate risk on at least 50% of the loan principal for the initial three years.
7The loan agreement includes standard covenants and default/acceleration provisions.

NEXTERA ENERGY INC 8-K Report, Financial Obligation (May 15, 2013)

Summary

Key Highlights

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